Correct Option (A)
According to the passage, the re-entry of private oil companies into the market is contingent upon two primary conditions:
- A transparent rule-based petrol pricing exists: The passage explicitly states that establishing a transparent formula for petrol pricing, where the maximum price can be derived from crude price (x) and exchange rate (y), is the essential "first step" to attract private players.
- There is no government interference in the oil producing market: The passage emphasizes that once the transparent pricing rule is announced, there should be "no interference by the government." This autonomy is presented as a crucial factor for firms to innovate, become efficient, and for private companies to re-enter.
Therefore, statements 1 and 2 accurately reflect the conditions mentioned in the passage for private oil companies to re-enter the market.
Incorrect Options:
- Statement 3 (Subsidies are given by the government): The passage does not mention government subsidies as an incentive or a condition for private oil companies to re-enter the market. The focus is entirely on market transparency and non-interference.
- Statement 4 (Regulations of anti-trust are removed): The passage explicitly states the opposite. It indicates that even when rule-based pricing is eventually removed and the market is left to operate freely, it would still be "subject to, of course, the usual regulations of anti-trust and other competition laws." This implies that such regulations are to be maintained, not removed.